PRINCIPLES INCOME TAX Study Guide Practice Questions And Answers Guaranteed Solution.

Taxation - correct answer is the act of laying a tax, the process or means by which the sovereign, through its law making body, raises income to defray the necessary expenses of the government. Lifeblood Theory - correct answer As stated in the case of CIR vs. Algue [158 SCRA 9], the existence of government is a necessity; it cannot exist nor endure without the means to pay its expenses; Necessity Theory - correct answer As stated in the case of PHILIPPINE GUARANTY V. CIR [13 SCRA 775], taxation is a necessary burden to preserve the States sovereignty and a means to give the citizenry an army to resist aggression, anavy to defend its shores from invasion, a corps of civil servants to serve, public improvements for the enjoyment of the citizenry, and those which come within the State's territory and facilities and protection which a government is supposed to provide Benefits-Protection Theory (Symbiotic relationship) - correct answer According to this principle, the basis of taxation is found in the reciprocal duties of protection and support between the State and its inhabitants. In return for his contribution, the taxpayer receives the general advantages and protection which the government affords the taxpayer and his property. Jurisdiction - correct answer is a reason why citizens must provide support to the state so the latter could continue to give protection. inherent - correct answer It is________ in nature being an attribute of sovereignty. legislative - correct answer It is ________ in nature because it is subject to constitutional limitations. nature - correct answer (kind); object - correct answer (purpose); extent - correct answer (rate); coverage - correct answer (subjects); and situs - correct answer (place) Fiscal Adequacy - correct answer sources of revenue must be adequate to meet expenditures. Violation of this principle will make the law unsound but still valid and not unconstitutional. Theoretical Justice - correct answer Taxes must be based on the taxpayer's ability to pay and proportional to the relative Administrative Feasibility - correct answer The taxes should be capable of being effectively enforced. Violation of this principle will make the law unsound but still valid and not unconstitutional. Power to Tax - correct answer Subject to inherent and constitutional limitations, the power of taxation is regarded as supreme, plenary, unlimited, and comprehensive. Police power - correct answer is the inherent power of a sovereign state to legislate for the protection of the health, general welfare, safety, and morals of the public. It involves the power to regulate both liberty and property for the promotion of public good. The power of eminent domain - correct answer is the inherent power of a sovereign state to take private property for a public purpose. The Constitution limits the exercise of this power by providing that: "Private property shall not be taken for public use without just compensation." (Art. III, Sec. 9, 1987 Philippine Constitution) Levy - correct answer the power of taxation is vested on and exercised by the legislative department. The determination of what should be taxed, when, how, or where lies in the legislative department. Assessment and Collection - correct answer exercised by the Executive Department. The agency in charge of the collection of internal revenue taxes is the BIR. For the most part of the lifeblood of the nations, the duty to collect rests with the BIR. Payment and/or Exercise of Remedies - correct answer compliance and/or resistance by the taxpayer. The exercise of remedy is initially either through the Executive or Legislative Department and ultimately through the Judiciary. Personal, poll or capitation - correct answer tax of a fixed amount imposed on persons residing within a specified territory, whether citizens or not, without regard to their property or the occupation or business in which they may be engaged. (ex. Community tax) Property - correct answer tax imposed on property, whether real or personal, in proportion either to its value, or in accordance with some other reasonable method of apportionment. (ex. real estate tax) Excise - correct answer any tax which does not fall within the classification of a poll tax or property tax. (ex. Income tax, value added tax) Direct - correct answer tax which demanded from the person who also shoulders the burden of the tax; or tax for which the taxpayers is directly liable or which he cannot shift to another. (ex. Income tax, donor's tax, estate tax) Indirect - correct answer tax which demanded from one person in the expectation and the intention that he shall indemnify himself at the expense of another, falling finally upon the ultimate purchaser or consumer; Specific - correct answer tax of a fixed amount imposed by the head or number, or some standard of weight or measurement. (ex. Tax on distilled spirits) Ad valorem - correct answer tax of fixed proportion of the value of the property with respect to which the tax is assessed. General or fiscal - correct answer tax imposed for the general purposes of the government, to raise revenue for governmental needs. (ex. Income tax) Special or regulatory - correct answer tax imposed for special purpose, i.e., to achieve some social or economic ends irrespective of whether revenue is actually raised or not. (ex. Protective tariffs) General or fiscal - correct answer tax imposed for the general purposes of the government, to raise revenue for governmental needs. (ex. Income tax) Special or regulatory - correct answer tax imposed for special purpose, i.e., to achieve some social or economic ends irrespective of whether revenue is actually raised or not. (ex. Protective tariffs) National - correct answer tax imposed by the national government. (ex. National internal revenue taxes) Municipal or local - correct answer tax imposed by the local government units. (ex. Real estate tax Proportional - correct answer tax based on a fixed percentage of the amount of the property, receipts or other basis to be taxed. (ex. Real estate tax) Progressive or graduated - correct answer tax the rate of which increases as the tax base or bracket increases. (ex. Income tax) Regressive - correct answer tax the rate of which decreases as the tax base or bracket increases, i.e., the tax rate and tax base move in opposite direction. Toll - correct answer sum of money for the use of something, generally applied to the consideration which is paid for the use of the road, bridge or the like, of a public nature.